According to an operator with knowledge of the situation, a commission issue is expected to cause the scan and payment system for Nepali tourists visiting India in December to be delayed.
“In India, using the quick response (QR) code to make a payment is free of fees. However, a specific commission should be paid to Nepali banks for this service whenever Nepalis begin using QR codes to make payments in India, according to a payment operator who asked not to be identified.
“Now, since merchants offer the service for free, who will pay the commission?” Regarding commissions or fees that must be paid to Nepali banks for each transaction, there are no rules. Consumers or merchants are not charged for payments from UPI-linked bank accounts. The UPI, or Unified Payments Interface, is an instant real-time payment system developed by the National Payments Corporation of India (NPCI) to facilitate inter-bank transactions through mobile phones.
In India, when a wallet user makes a payment, the merchant acquirer pays the interchange fee to the wallet issuer. Whether the acquirer will pass this fee to the merchant has not been determined. The interchange fee of up to 1.1 percent applies only on transactions above IRs2,000 to online merchants and large retailers. Furthermore, interchange fees do not apply to peer-to-peer (P2P) payments and small businesses in the P2PM category.
India has mandated a zero-charge framework for UPI transactions from January 1, 2020. This means that UPI charges are nil for users and merchants alike. This issue in Nepal has delayed the activation of QR codes for Nepali travellers in India. This is a major hurdle to Nepalis making QR code payments in India, the source added. Operators say multiple discussions have been held regarding the commission issue, including the amount or percentage of the commission to be provided to Nepali banks and who will bear the cost.
But there has been no logical conclusion so far. “India’s central bank is also discussing the issue with banks there,” according to the operator. “So it will still take a few months for Nepalis to make QR code payments in India.” Nepal is technically ready to start QR payments in India with approval from Nepal’s central bank. However, unless the Indian side gives a go-ahead, Nepal cannot start the QR payment in India.
Nepal even has already conducted a successful trial transaction in India. In September, Nabil Bank trialled transactions through its mobile banking app in Mumbai, India, and achieved a successful result. The Reserve Bank of India needs to provide approval for payment system operators, and banks also need to show their readiness to start the service, operators said. On June 1 last year, Nepal and India signed a memorandum of understanding for cross-border digital payment to ease digital transactions for business people, students, and tourists from both countries.
Nepal Clearing House Limited (NCHL) and National Payment Corporation of India (NPCI) International Payments Limited signed and exchanged the memorandum of agreement on behalf of their respective organisations in New Delhi, India.
The digital remittance under cross-border digital payment service initiated through a government-to-government agreement has also been delayed from the Indian side. NCHL agreed to a cross-border digital remittance service. However, a year after the agreement, the service has yet to start.
NCHL has a 10 percent investment from Nepal Rastra Bank and 90 percent from other commercial banks. The central bank handed NCHL the work of establishing and operating a national payment switch and card. In September last year, Fonepay Payment Service Ltd, Nepal’s largest payment network and NPCI International Payments Ltd (NIPL), the international arm of the National Payments Corporation of India, agreed to launch the first QR code-based payment solution between Nepal and India. On March 1, Indians in Nepal were allowed to make payments through their mobile phones.
The development was hailed as a milestone in cross-border digital payment between Nepal and India, facilitating the students and people going to India for medical purposes. The QR code system has become a boon for tourists, especially those from India.
Source: Here